**Exhibit 10. 2**

 

Confidential Materials omittedand filed separately with theSecurities and Exchange Commission. Asterisks denote omissions.

 

 

 

 

**CONTRIBUTION, DEVELOPMENT ANDMANUFACTURING AGREEMENT**

** **

**by and among**

** **

**PLC SYSTEMS,INC.,**

** **

**PLC MEDICALSYSTEMS, INC.**

** **

**AND**

** **

**EDWARDSLIFESCIENCES LLC**

** **

**dated as ofFebruary 24, 2004**

 

 

 

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**TABLE OF CONTENTS**

 
| **ARTICLE I  DEFINITIONS**                                             |   |                                                            |
|-----------------------------------------------------------------------------|--------|-----------------------------------------------------------------|
| **ARTICLE II  CONTRIBUTION OF ASSETS**                                 |   |                                                            |
| Section 2.1                                                            |   | Contribution of Assets                                          |   |   |
| Section 2.2                                                            |   | [Intentionally deleted.]                                        |   |   |
| Section 2.3                                                            |   | License of Intellectual Property and  Know-How                  |   |   |
| Section 2.4                                                            |   | Rights Upon Termination by Edwards                              |   |   |
| Section 2.5                                                            |   | Rights Upon Termination by PLC                                  |   |   |
| Section 2.6                                                            |   | Transition Period                                               |   |   |
| **ARTICLE III  PROSECUTION AND MAINTENANCE OF RIGHTS IN INVENTION(S)** |   |                                                            |
| Section 3.1                                                            |   | Rights To Invention(s)                                          |   |   |
| Section 3.2                                                            |   | Disclosure of Invention(s)                                      |   |   |
| Section 3.3                                                            |   | Prosecution and Maintenance of Patents and  Patent Applications |   |   |
| Section 3.4                                                            |   | Alternate Responsibility for Prosecution                        |   |   |
| Section 3.5                                                            |   | Power of Attorney                                               |   |   |
| Section 3.6                                                            |   | Enforcement of Patents                                          |   |   |
| **ARTICLE IV  DEVELOPMENT OF SURGICAL PRODUCTS**                       |   |                                                            |
| Section 4.1                                                            |   | Scope of Collaboration                                          |   |   |
| Section 4.2                                                            |   | Steering Committee                                              |   |   |
| Section 4.3                                                            |   | Responsibilities of the Steering Committee                      |   |   |
| Section 4.4                                                            |   | Project Manager                                                 |   |   |
| Section 4.5                                                            |   | Meetings                                                        |   |   |
| Section 4.6                                                            |   | Decision Making Criteria                                        |   |   |
| Section 4.7                                                            |   | Dispute Resolution                                              |   |   |
| Section 4.8                                                            |   | Selection of Trademarks                                         |   |   |
| Section 4.9                                                            |   | PLC Investment in Additional Surgical  Products                 |   |   |
| **ARTICLE V  MANUFACTURE OF SURGICAL PRODUCTS**                        |   |                                                            |
| Section 5.1                                                            |   | Appointment                                                     |   |   |

 

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| Section 5.2                                               |   | Legal Requirements                                    |   |   |
|----------------------------------------------------------------|--------|-------------------------------------------------------|--------|--------|
| Section 5.3                                               |   | Facilities                                            |   |   |
| Section 5.4                                               |   | Inspection                                            |   |   |
| Section 5.5                                               |   | Adverse Experience Reporting                          |   |   |
| Section 5.6                                               |   | Records                                               |   |   |
| Section 5.7                                               |   | Recall                                                |   |   |
| **ARTICLE VI  REPRESENTATIONS, WARRANTIES AND COVENANTS** |   |                                                  |
| Section 6.1                                               |   | Representations and Warranties of Edwards             |   |   |
| Section 6.2                                               |   | Representations and Warranties of PLC and  PLC Parent |   |   |
| Section 6.3                                               |   | Edwards’ Covenants                               |   |   |
| Section 6.4                                               |   | PLC and PLC Parent’s Covenants                   |   |   |
| Section 6.5                                               |   | Warranty Disclaimer                                   |   |   |
| **ARTICLE VII  INDEMNITY**                                |   |                                                  |
| Section 7.1                                               |   | Indemnification by PLC and PLC Parent                 |   |   |
| Section 7.2                                               |   | Indemnification by Edwards                            |   |   |
| Section 7.3                                               |   | Indemnification Procedures                            |   |   |
| Section 7.4                                               |   | Limitation of Liability                               |   |   |
| **ARTICLE VIII OTHER AGREEMENTS**                         |   |                                                  |
| Section 8.1                                               |   | Confidential Information Generally                    |   |   |
| Section 8.2                                               |   | Restrictions on Confidential Information              |   |   |
| Section 8.3                                               |   | Publicity                                             |   |   |
| **ARTICLE IX TERM; TERMINATION**                          |   |                                                  |
| Section 9.1                                               |   | Term of this Agreement                                |   |   |
| Section 9.2                                               |   | Termination of this Agreement                         |   |   |
| Section 9.3                                               |   | Effect of Termination                                 |   |   |
| Section 9.4                                               |   | Survival                                              |   |   |
| **ARTICLE X  MISCELLANEOUS**                              |   |                                                  |
| Section 10.1                                              |   | Relationship                                          |   |   |
| Section 10.2                                              |   | No Conflict                                           |   |   |
| Section 10.3                                              |   | Governing Law                                         |   |   |

 

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| Section 10.4       |   | Escalation                                            |   |   |
|-------------------------|--------|-------------------------------------------------------|--------|--------|
| Section 10.5       |   | Jurisdiction and Consent to Service                   |   |   |
| Section 10.6       |   | Notices                                               |   |   |
| Section 10.7       |   | Interpretation                                        |   |   |
| Section 10.8       |   | Severability                                          |   |   |
| Section 10.9       |   | Counterparts                                          |   |   |
| Section 10.10      |   | Entire Agreement; No Third Party  Beneficiaries       |   |   |
| Section 10.11      |   | Amendments and Modifications; Waivers and  Extensions |   |   |
| Section 10.12      |   | Assignment                                            |   |   |
| Section 10.13      |   | Exhibits and Schedules                                |   |   |
| Section 10.14      |   | Expenses                                              |   |   |
| Section 10.15      |   | Force Majeure                                         |   |   |
|                    |   |                                                  |   |   |
| Schedules  and Exhibits |   |                                                  |

 

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**CONTRIBUTION,DEVELOPMENTAND MANUFACTURING AGREEMENT**

 

This CONTRIBUTION, DEVELOPMENT AND MANUFACTURING AGREEMENT(“Agreement”) is entered into as of February 24, 2004 (the “EffectiveDate”), by and among Edwards Lifesciences LLC, a Delaware limited liabilitycompany (“Edwards”), PLC Systems Inc., a Yukon Territory corporation (“PLCParent”) and PLC Medical Systems, Inc., a Delaware corporation (“PLC”), whichis a wholly owned subsidiary of PLC Parent.

 

WHEREAS, Edwards owns assets related to products for the surgicaltreatment of atrial fibrillation and atrial flutter, including a laser andrelated disposable products, and desires to contribute certain of such assetsto PLC for the purposes of developing and manufacturing “Surgical Products” (asdefined herein) by PLC;

 

WHEREAS, in addition to the contribution of assets to PLC, Edwards willlicense to PLC intellectual property and know-how and shall collaborate withPLC in the development and manufacturing of Surgical Products, subject to theterms and conditions of this Agreement;

 

WHEREAS, PLC has experience in the development and manufacturing oflaser related products for medical uses and desires to develop and manufactureSurgical Products that are derived from the assets to be contributed by Edwardsto PLC pursuant to this Agreement and the technology and know-how to belicensed from Edwards to PLC pursuant to, and subject to the terms andconditions of this Agreement; and

 

WHEREAS, concurrently with the execution of this Agreement, Edwards,PLC and PLC Parent shall enter into a Distribution Agreement (the “DistributionAgreement”) that will provide for the distribution and sale by Edwards of anySurgical Products developed and manufactured pursuant to this Agreement;

 

NOW, THEREFORE, in consideration of the mutual agreements and covenantscontained herein and for other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, and intending to be legally boundhereby, the Parties hereto agree as follows:

 

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**ARTICLE I****DEFINITIONS**

 

As used in this Agreement, the following terms shall have the followingmeanings:

 

“Additional Period” shall have the meaning set forth inSchedule 2.6.

 

“Additional Surgical Products” shall have the meaning set forth underthe definition of Surgical Products below.

 

“Affiliate” of any Person means any other Person that directly, orindirectly through one or more intermediaries, controls, is controlled by, oris under common control with, such first Person.  For purposes of the definition of affiliate, “control” has themeaning specified in Rule 12b-2 under the Securities Exchange Act of 1934, asamended, and the rules and regulations promulgated thereunder, as in effect onthe date of this Agreement.

 

“Agreement” shall have the meaning specified in the Recitals.

 

“Applicable Regulatory Approval” means the approval or clearancereceived from any Applicable Regulatory Authority to market and sell theSurgical Products in the Territory, including, without limitation, the approvalor clearance to market and sell expanded or enhanced indications.  By way of example, and not by limitation, inthe United States, an FDA approval of a pre-market approval application(“PMA”)) or a clearance of a pre-market notification (“510(k)”) or approval ofan investigational device exemption (“IDE”) may be an Applicable RegulatoryApproval.

 

“Applicable Regulatory Authority” means any agency or regulatoryauthority or its designee having authority over the approval and sale of theSurgical Products within the Territory. By way of example, and not by limitation, in the United States, the FDAis an Applicable Regulatory Authority.

 

“Bankruptcy” of any Party means any of the following events:

 

(a)                                  Such Party admits itis generally unable to pay its debts as they come due;

 

(b)                                 The institution bysuch Party of proceedings to be adjudicated as bankrupt, or insolvent or theconsent by such Party to the institution of bankruptcy or Insolvencyproceedings against such Party or the filing by such Party of a petition oranswer or consent seeking reorganization or release under any applicable law,or the consent by such Party to the filing of any such petition or theappointment of a receiver, liquidator, assignee, trustee, or other similarofficial of such Party, or of any substantial part of such Party’s property, orthe making by such Party of an assignment for the benefit of creditors; or

 

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(c)                                  The institution,consent, or filing by (or against) such Party of any composition, reorganization,or bankruptcy liquidation proceedings under applicable law provided that in thecase of any such involuntary proceeding, such proceeding is not dismissedwithin sixty (60) days.

 

“CardioFocus License” means that certain exclusive license agreementbetween Edwards Lifesciences LLC and CardioFocus, Inc., dated December 27,2002, attached hereto as Exhibit B.

 

“Claim” means any claim, action, arbitration, proceeding, review,audit, hearing, investigation, litigation, or suit (whether civil, criminal,administrative, investigative, informal or threatened).

 

“Clinical Studies” means those studies designed to obtain clinical datain support of a Product approval or clearance (for example, pre-market approvalapplication (“PMA”) or 510(k) clearance) as required by the FDA or otherRegulatory Authority.

 

“Complaint” means any written, electronic, or oral communication thatalleges deficiencies related to the identity, quality, durability, reliability,safety, effectiveness, or performance of a Product after it is released fordistribution.

 

“Confidential Information” means all information which is disclosed bya Party (the “Disclosing Party”) to the other Party (the “Receiving Party”) inwriting and clearly marked as “Confidential” or if disclosed orally, which isconfirmed in writing as “Confidential” within thirty (30) days of initialdisclosure.  “Confidential Information”does not include information:  which is(a) independently developed by the Receiving Party without the benefit of thedisclosure or is already known to the Receiving Party at the time ofdisclosure, (b) publicly known or becomes publicly known without the wrongfulact or breach of this Agreement by the Receiving Party; or (c) rightfullyreceived by the Receiving Party from a third party who is not under anyobligation of confidentiality or trade secret obligation to the DisclosingParty.

 

“Contributed Assets” shall have the meaning set forth inSection 2.1.

 

“Development Plans” shall have the meaning set forth inSection 4.4.

 

“Disclosing Party” shall have the meaning set forth above in thedefinition of Confidential Information.

 

“Dispute” shall have the meaning set forth in Section 10.4.

 

“Distribution Agreement” shall have the meaning set forth in therecitals.

 

“Edwards Copyright Rights” means all (a) U.S. and foreign copyrightsand all other similar or related rights, whether statutory or arising undercommon law, owned by or

 

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licensed to Edwards Parent or its Subsidiaries relating to the Field ofUse (whenever such copyrights, applications or registrations are filed orissued), or that may result from Edwards Intellectual Property, (b) copyrightapplications and registrations, and certificates of copyright pertainingthereto, including but not limited to, copyright registrations andapplications, and (c) any extensions and renewals of any of the foregoing.

 

“Edwards Indemnitees” means Edwards and its directors, officers,employees, Affiliates and agents.

 

“Edwards Intellectual Property” means Edwards Technology and TradeSecrets, Edwards Patents, the CardioFocus License and Edwards Copyright Rights.

 

“Edwards Parent” shall mean Edwards Lifesciences Corporation, aDelaware corporation.

 

“Edwards Patents” means (a) all U.S. and foreign patents and patentapplications owned by or licensed to Edwards Parent or its Subsidiariesrelating to the Field of Use (whenever such patents or patent applications arefiled or issued), or that may result from any of Edwards Intellectual Property,together with any patents that may issue based thereon; including but notlimited to the patents and patent applications set forth on Exhibit A1 andExhibit A2 of the CardioFocus License, (b) all foreign counterpart,continuation, divisional, continuation-in-part, re-issue and substitutionapplications that may be filed by or for the benefit of Edwards based on theforegoing, together with any patents that may issue based thereon.

 

“Edwards Regulatory Plans” shall have the meaning set forth inSection 4.1(a)(iv).

 

“Edwards Technology and Trade Secrets” means all inventions,discoveries, formulas, processes, methods, designs, techniques, developments,technology, and related improvements, whether or not patentable orcopyrightable, and any work that incorporates, is based upon, derived from, orotherwise uses any of the foregoing, including, without limitation, allInformation, and any trade secret or other intellectual property rights in anyof the foregoing, owned by or licensed to Edwards Parent or its Subsidiaries,that relate to the Field of Use.

 

“Effective Date” shall have the meaning set forth in the recitals.

 

“Encumbrance” means any claim, charge, easement, encumbrance lease,covenant, security interest, lien, option, pledge, rights of others (including,but not limited to, options and rights of first refusal), or restriction(whether on sale, transfer, disposition or otherwise), whether imposed byagreement, understanding, law, equity or otherwise.

 

“Escalation Notice” shall have the meaning set forth in Section 10.4.

 

“ETL” shall have the meaning set forth in Section 4.1(b)(iii).

 

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“FDA” means the United States Food and Drug Administration and anysuccessor agency thereto.

 

“Field of Use” means the surgical treatment of atrial fibrillation andatrial flutter, including, without limitation, minimally invasive surgicaltreatment of atrial fibrillation and atrial flutter.

 

“First Amendment to TMR Distribution Agreement” means that certainFirst Amendment to Distribution Agreement, dated as of the date of thisAgreement, by and among Edwards, PLC Parent and PLC.

 

“First Amendment to Shareholder Agreement” means that certain FirstAmendment to Shareholders Agreement, dated as of the date of this Agreement, byand among Edwards Lifesciences Corporation and PLC Parent.

 

“Force Majeure Event” shall have the meaning set forth inSection 10.15.

 

“Governmental Entity” means any government or political subdivisionthereof, governmental department, commission, board, bureau, agency, regulatoryauthority, instrumentality, judicial or administrative body having jurisdictionover the matter or matters in question.

 

“Indemnified Party” shall have the meaning set forth inSection 7.3.

 

“Indemnifying Party” shall have the meaning set forth inSection 7.3.

 

“Initial Surgical Products” shall have the meaning set forth in thedefinition of Surgical Products below.

 

“Intellectual Property” means all intellectual property rights of anynature or form of protection of a similar nature or having equivalent orsimilar effect to any of the foregoing, including, without limitation:  (a) inventions, discoveries, processes,designs, techniques, developments, technology, and related improvements,whether or not patentable; (b) United States patents, patent applications,divisionals, continuations, reissues, renewals, registrations, confirmations,re-examinations, certificates of inventorship, extensions, and the like, andany provision applications of any such patents or patent applications, and anyforeign or international equivalent of any of the foregoing; (c) any word,name, symbol, color, designation, or device or any combination thereof,including, without limitation, any United States or pending trademark, tradedress, service mark, service name, trade name, brand name, logo, domain name,or business symbol, and any foreign or international equivalent of any of theforegoing and all goodwill associated therewith; (d) any work, whether or notregistered in the United States or elsewhere, that incorporate, is based upon,derived from, or otherwise uses any intellectual property, including, withoutlimitation, mechanical and electronic design drawings (including, withoutlimitation, computer-aided design files), specification, software (including,without limitation,

 

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documentation and object and source code listing), processes, technicalor engineering data, test procedures, schematics, writings, materials,products, artwork, packaging and advertising materials; and (e) technical,scientific, and other know-how and information, trade secrets, knowledge,technology, means, methods, processed, practices, formulas, assemblyprocedures, computer programs, apparatuses, specifications, books, records,production data, publications, databases, reports, manuals, data and results,in written, electronic, or any other form not known or hereafter developed.

 

“Invention(s)” as used herein shall include, without restriction orlimitation, any and all devices, processes (including without limitationprocesses of using devices or of manufacturing such devices), compositions ofmatter, computer software, chemical formulations or compositions or productswhether patentable or unpatentable, and any and all written materials or otherworks which may be subject to copyright, which are reduced to practice,conceived or written during the Term of this Agreement, which is/are based uponany Edwards Intellectual Property, or developed as a result of work done byeither or both Parties under this Agreement.

 

“Law” means a constitutional provision, statute, or other law, rule,regulation, or interpretation of any Governmental Entity and any Order.

 

“Legal Requirements” means all laws, statutes, ordinances, codes,rules, regulations, published standards, permits, judgments, decrees, writs,injunctions, rulings, orders and other requirements of all Public Authoritiesand shall include, without limitation, all applicable requirements of QSR/ISOand all Legal Requirements applicable to the import or export of the SurgicalProducts to any destination where they are to be delivered pursuant toSection 6.1 hereof.

 

“Losses” means all Claims, losses, liabilities, damages, costs,obligations, assessments, penalties and interest, demands and expenses(including, without limitation, actual attorneys’ fees), whether direct orindirect, known or unknown, absolute or contingent (including, withoutlimitation, settlement costs and any legal, accounting and other expenses forinvestigation or defending any Claims).

 

“Major Decisions” shall have the meaning set forth in Section 4.3.

 

“Marketing/Clinical Plans” shall have the meaning set forth inSection 4.1(a)(vi).

 

“Marketing Studies” means those studies conducted after Productapproval or clearance designed to enhance or further develop a market.

 

“Net Sales” shall have the meaning set forth in Section 2.4(b).

 

“Order” means any decree, injunction, judgment, order, ruling,assessment or writ.

 

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“Party” means Edwards, PLC or PLC Parent and “Parties” meanscollectively, Edwards, PLC and PLC Parent.

 

“Person” means any individual, partnership, corporation, limitedliability company, joint venture, association, joint-stock company, trust,incorporated organization, government or agency or political subdivisionthereof, or other entity.

 

“PLC Indemnitee(s)” means any or all of PLC, PLC Parent and theirrespective directors, officers, employees, Affiliates and agents.

 

“PLC Intellectual Property” means any Intellectual Property owned by orlicensed to PLC or PLC Parent but does not include the Intellectual Propertylicensed to PLC pursuant to this Agreement.

 

“PLC Regulatory Plans” shall have the meaning set forth inSection 4.1(b)(iii).

 

“Pre-Clinical Studies” shall have the meaning set forth inSection 4.1(b)(v).

 

“Products” means products, processes, technology and services, alongwith accessories related to the use thereof.

 

“Project Manager” shall have the meaning set forth in Section 4.4.

 

“Public Authority” means any supranational, national, regional, stateor local government, court, governmental agency, authority, board, bureau,instrumentality or regulatory body, and shall include, without limitation, theFDA.

 

“QSR/ISO” means the Quality System Regulation, as such term is definedby the FDA which is in force and effect or hereafter adopted by the FDA, andthe ISO 9001 requirements as established for the European Community, or otherapplicable regulatory requirements and standards, as amended or supplementedfrom time to time.

 

“Receiving Party” shall have the meaning set forth above in thedefinition of Confidential Information.

 

“Roles and Responsibilities” shall have the meaning set forth inSection 4.1.

 

“Steering Committee” or “SC” shall have the meaning set forth inSection 4.2.

 

“Subsidiaries” means any Person controlled directly or indirectly byEdwards Parent.

 

“Surgical Products” means Products related to or with applications inthe Field of Use.  A list of initialSurgical Products is set forth in Schedule 1.1 (“Initial SurgicalProducts”).

 

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The Parties may identify additional Surgical Products fromtime-to-time.  Such Additional SurgicalProducts shall be set forth in Schedule 1.2 (“Additional SurgicalProducts”), which the Parties may supplement from time-to-time after theEffective Date.

 

“Temporary Outside Member” shall have the meaning set forth inSection 4.7.

 

“Term of this Agreement” shall have the meaning set forth inSection 9.1.

 

“Territory” means the entire world.

 

“Transaction Documents” means this Agreement, the DistributionAgreement, the First Amendment to TMR Distribution Agreement and the FirstAmendment to Shareholders Agreement and all related agreements and documents,collectively.

 

“Transactions” means the transactions contemplated by the TransactionDocuments.

 

“Transition Period” shall have the meaning set forth inSchedule 2.6.

 

“Transition Products” shall have the meaning set forth inSchedule 2.6.

 

“UL” shall have the meaning set forth in Section 4.1(b)(iii).

 

**ARTICLE II****CONTRIBUTION OF ASSETS**

 

Section 2.1                                      Contributionof Assets.  In consideration ofPLC’s agreements contained herein, Edwards hereby contributes, assigns,transfers, conveys and delivers to PLC, and PLC acquires and accepts fromEdwards, all assets of Edwards listed on Schedule 2.1 (the “ContributedAssets”) in accordance with the delivery schedule set forth inSchedule 2.1.  In furtherance of thecontribution of the Contributed Assets, concurrently with the execution of thisAgreement, Edwards and PLC shall execute a Bill of Sale and Assignment in theform of Exhibit A.  The ContributedAssets are contributed by Edwards to PLC free and clear of all Encumbrances,except as described in Schedule 2.1. PLC shall have no obligation to make any cash payment to Edwards for theContributed Assets.  Delivery of certainof the Contributed Assets to PLC as indicated on Schedule 2.1 will takeplace as soon as practicable following the completion of the Transition Periodpursuant to Section 2.6

 

Section 2.2                                      [Intentionallydeleted.]

 

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Section 2.3                                      Licenseof Intellectual Property and Know-How. Except as described in the following sentence, subject to the terms and conditionsof this Agreement, Edwards hereby grants to PLC and its Affiliates aroyalty-free, exclusive limited license in, to and under Edwards IntellectualProperty and to Edwards’ rights in the Invention(s), with the right tosublicense, to develop, make, have made and use Surgical Products in theTerritory during the Term of this Agreement for the sole purpose of supplyingsaid Surgical Products (including any Surgical Products offered by Edwards andaccepted by PLC pursuant to Section 2.2 of the Distribution Agreement) toEdwards in accordance with the Distribution Agreement.  Notwithstanding the foregoing, the licensegranted by Edwards in the previous sentence shall be co-exclusive with Edwardsduring the Transition Period and will become exclusive to PLC and itsAffiliates as soon as practicable following completion of the Transition Periodbut no later than expiration of the Additional Period.

 

Section 2.4                                      RightsUpon Termination by Edwards.  In theevent that Edwards terminates the Agreement pursuant to eitherSection 9.2(c), 9.2(d) or 9.2(e) below, or in the event PLC terminates theAgreement pursuant to Section 9.2(b), Edwards shall grant to PLC thefollowing license:

 

(a)                                  Edwardshereby grants to PLC and its Affiliates an exclusive, irrevocable, worldwide,perpetual license in, to and under Edwards Intellectual Property and toEdwards’ rights in the Invention(s), with the right to sublicense, to develop,make, have made, use, import, offer for sale and sell Surgical Products(including any Surgical Products offered by Edwards and accepted by PLCpursuant to Section 2.2 of the Distribution Agreement at the time of, orprior to, such termination) in the Territory, and PLC hereby accepts thelicense granted under this Section 2.4 and in consideration thereforeagrees to pay to Edwards a royalty of [**] percent ([**]%) of the Net Sales,defined below, of any Surgical Product that but for the license granted underthis Section 2.4 would infringe a valid, unexpired claim of any of theEdwards Patents, or a patent that issues on any of the Invention(s).

 

(b)                                 “NetSales” shall mean the actual proceeds received by PLC or its Affiliates fromthe sale, rent, lease of or otherwise making available to third parties, notaffiliated with PLC, Surgical Products, net of any royalty paid to any thirdparty, and less the following, to the extent the same are credited or deductedfrom the sales:  refunds, discounts,credits allowed to purchasers for return of Surgical Products or asreimbursement for damaged Surgical Products, freight, insurance, and othershipping charges, sales and use taxes, customs duties, and any othergovernmental tax or charge (except income taxes) imposed on or at the time ofthe production, importation, use, or sale of Surgical Products, including anyvalue added taxes (VAT), as adjusted for rebates and refunds.

 

Section 2.5                                      RightsUpon Termination by PLCIn the event that PLC terminates this Agreementpursuant to either Section 9.2(c) or 9.2(d), or in the event Edwardsterminates this Agreement pursuant to Section 9.2(b), then PLC shall grantto Edwards the same rights granted to Edwards pursuant to Sections 6.3 and 6.5of the Distribution Agreement as though a

 

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“Supply Breach” (as defined in the Distribution Agreement) had occurredpursuant to Section 6.4 of the Distribution Agreement (without regard toSection 6.4(b) of the Distribution Agreement).

 

Section 2.6                                      TransitionPeriod.  Edwards and PLC understandand agree that during the Transition Period Edwards shall manufactureTransition Products which may be sold by Edwards during the Transition Periodand the Additional Period without being subject to the DistributionAgreement.  Schedule 2.6 describesthe roles and responsibilities of the Parties during the Transition Period, andother terms and conditions of the Transition Period, which Schedule issubject to amendment or modification from time to time by the SC.

 

**ARTICLE III****PROSECUTION AND MAINTENANCE OF RIGHTS IN INVENTION(S)**

 

Section 3.1                                      RightsTo Invention(s).  Any and allInvention(s) shall be jointly owned by Edwards and PLC, which shall be effectedin accordance with the assignments jointly to Edwards and PLC described in  Section 6.3(c) and 6.4(c) of thisAgreement.  Such ownership shall be inaccordance with 35 USC 262 of the U.S. patent laws in the United States, andwith no obligation to obtain the consent of, or to provide an accounting to,the other Party with respect to the Invention(s) in every other jurisdiction inthe Territory, provided, however, that Edwards shall have the exclusive rightto the Invention(s) in the Field of Use. PLC agrees to grant to Edwards and hereby grants to Edwards anexclusive, irrevocable, worldwide, perpetual, royalty-free license, with theright to grant sublicenses, in, to and under any and all rights to suchInvention(s) in the Field of Use, including rights under the patent orcopyright laws of the United States or any other country, to make, have made,import, use, lease, offer to sell, sell, and/or otherwise dispose of Productsin the Field of Use.  Each of theParties further agrees to use reasonable efforts to protect the confidentialityof the Invention(s).

 

Section 3.2                                      Disclosureof Invention(s).  PLC shall promptlydisclose to Edwards each such Invention within thirty (30) days of conceivingand/or reducing to practice such Invention and, Edwards shall promptly discloseto PLC each such Invention within thirty (30) days of conceiving and/orreducing to practice such Invention. The Parties intend that there be timely and full exchange of informationarising from work performed under this Agreement.  Each Party shall promptly disclose to the other Party any data ordevelopment that it reasonably believes would or could have a material effect,whether positive or negative, on the development or sale of Surgical Products.

 

Section 3.3                                      Prosecutionand Maintenance of Patents and Patent Applications.  Subject to review by the Steering Committee,Edwards will evaluate Invention(s) disclosed pursuant to Section 3.2 anddetermine the advisability of filing patent applications directed to anyInvention(s).  Edwards shall, at itsexpense, diligently file, prosecute, issue and maintain patents, patentapplications or other forms of intellectual property rights or registrationsthat embody, express or are directed to Invention(s), according to its owninternal standards and for effectively covering other inventions made byemployees or consultants.  Edwards willsubmit a

 

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substantially complete draft of each patent application to PLC prior tofiling with such advance notice as it reasonably can under thecircumstances.  The Parties will conferwith each other regarding the prosecution of such patent applications.  Upon Edwards’ request and at Edwards’expense, PLC shall provide reasonable assistance to Edwards, or anyone itdesignates, with the filing and prosecution of any patent or copyrightapplication in any country in the world. PLC will execute all papers and do all things which may be necessary oradvisable, in the reasonable opinion of Edwards, to prepare, file and prosecutesuch applications.

 

Section 3.4                                      AlternateResponsibility for Prosecution.  Inthe event that Edwards determines that it will not file, prosecute, issue ormaintain, a patent or patent application directed to any Invention(s) in anycountry it shall so notify PLC on a timely basis.  PLC shall then have the right, but not the obligation, to assumeresponsibility, at its own expense, for such patent or patent application.  Upon PLC’s request and at PLC’s expense,Edward shall provide reasonable assistance to PLC, or anyone it designates,with the filing and prosecution of any patent or copyright application in anycountry in the world.  Edwards willexecute all papers and do all things which may be necessary or advisable, inthe reasonable opinion of PLC, to prepare, file and prosecute suchapplications.

 

Section 3.5                                      Powerof Attorney.  If for any reasonEdwards is unable to obtain PLC’s execution of any paper necessary to prepare,file and/or prosecute any patent or copyright application in any Invention(s),PLC hereby conveys to Edwards its power of attorney only for the purpose ofexecuting any such papers necessary to prepare, file and/or prosecute suchapplications and/or maintain such patent or copyright.  Pursuant to Section 3.4 above, if PLCassumes responsibility for a patent or a copyright in any Invention(s) and iffor any reason PLC is unable to obtain Edward’s execution of any papernecessary to prepare, file and/or prosecute any patent or copyright applicationin such Invention(s), Edwards hereby conveys to PLC its power of attorney onlyfor the purpose of executing any such papers necessary to prepare, file and/orprosecute such applications and/or maintain such patent or copyright.

 

Section 3.6                                      Enforcementof Patents.  Edwards and PLC may,but shall not be required to, prosecute any alleged infringement or threatenedinfringement of a patent directed to any Invention(s) of which they are awareor which is brought to their attention. The prosecuting Party shall act in its own name and at its own expenseunless the other Party, at its option, agrees in writing, within ten (10)business days after notification by the prosecuting Party of its prosecution ofany such infringement, to pay fifty percent (50%) of all out-of-pocket costsassociated with the prosecution. Edwards and PLC shall cooperate fully with each other including, ifrequired to bring such action, the furnishing of a power of attorney.  Any recovery obtained shall belong to theprosecuting Party unless the other Party has paid fifty percent (50%) of saidcosts pursuant to the second sentence of this Section 3.6, in which caseeach Party will receive fifty percent (50%) of any recovery.

 

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**ARTICLE IV****DEVELOPMENT OF SURGICAL PRODUCTS**

 

Section 4.1                                      Scopeof Collaboration.  The Parties willwork together to research, develop and commercialize Surgical Products pursuantto this Agreement in the Territory in accordance with their respective rolesand responsibilities set forth below (the “Roles and Responsibilities”).  The Parties shall use commerciallyreasonable efforts in performing their obligations under this Agreement.  Subject to the previous sentence, theParties’ respective primary responsibilities for these activities shall be asfollows:

 

(a)                                  Responsibilityof Edwards:

 

(i)                       Edwards will identify andspecify Surgical Products for development and manufacture by PLC.

 

(ii)                    Edwards will distribute and marketSurgical Products.

 

(iii)                 Edwards will inform the SC of itssales and marketing plans and efforts, including customer requirements, marketresearch results and competitor activities.

 

(iv)                All regulatory filings including,without limitation, those filings made in connection with an ApplicableRegulatory Approval, with respect to the Surgical Products, in the Territory,excluding the United States and all countries of the European Union, shall befunded and undertaken by Edwards according to plans (“Edwards RegulatoryPlans”) established by Edwards and reviewed by the SC.  Edwards shall obtain and maintain allapprovals and clearances with respect to the sale of Surgical Products in theTerritory excluding the United States and all countries of the EuropeanUnion.  PLC shall provide Edwards withall necessary information for the preparation of such regulatory filings andreasonable assistance necessary to support such filings.

 

(v)                   Edwards shall provide PLC with thenecessary information on all applicable regulatory requirements including,without limitation, with respect to the manufacture, promotion, marketing, saleor use of Surgical Products for any country where Edwards elects to sellSurgical Products except the United States and countries of the European Union.

 

(vi)                All Clinical Studies or MarketingStudies with respect to the Surgical Products that are conducted within theTerritory will be approved, funded and conducted by Edwards according to plans(“Marketing/Clinical Plans”) established by Edwards and reviewed by the SC.

 

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(vii)             At no cost to Edwards, Edwards shallprovide reasonable access to its principal clinical investigators in the Fieldof Use and to Edwards’ animal lab facilities for purposes of Pre-ClinicalStudies (as defined in Section 4.1(b)(v) below), taking into accountEdwards’ research priorities.

 

(viii)          Edwards shall reimburse PLC for [**] percent([**]%) of the cost of work performed by [**] as described in that writtenquote, dated February 9, 2004 (the “Quote”), provided by [**] to Edwards,a copy of which is attached hereto as Schedule 4.1(a)(viii).

 

(b)                                 Responsibilitiesof PLC:

 

(i)                       PLC will research, develop andmanufacture Surgical Products.

 

(ii)                    PLC will inform the SC with respectto research and development plans, manufacturing and design plans, and costsassociated therewith.

 

(iii)                 All regulatory filings including,without limitation, those filings made in connection with an ApplicableRegulatory Approval, with respect to the Surgical Products, in the UnitedStates and all countries of the European Union, shall be funded and undertakenby PLC according to plans (“PLC Regulatory Plans”) established by PLC andreviewed by the SC.  PLC shall and PLCParent shall cause PLC to obtain and maintain all approvals and clearancesrequired with respect to the sale of the Surgical Products in the United Statesand the European Union, including, without limitation, approvals from the FDAand certifications from the Electrical Testing Laboratory (“ETL”) and/orUnderwriter’s Laboratories (“UL”), as applicable.  Edwards shall provide PLC with all necessary information for thepreparation of such regulatory filings and reasonable assistance necessary to supportsuch filings.

 

(iv)                Notwithstanding Sections   4.1(a)(iv) and 4.1(b)(iii), but subject toSection 4.1(b)(v) PLC shall be responsible for making Surgical Products incompliance with all regulatory requirements with respect to the SurgicalProducts in any country where Edwards elects to market and sell SurgicalProducts.

 

(v)                   PLC shall be responsible for allcosts and expenses associated with “Pre-Clinical Studies.”  “Pre-Clinical Studies” shall mean animalstudies, in vitro studies, cadaver studies and other similar studies associatedwith the research, development and manufacture of Surgical Products.

 

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Notwithstanding the foregoing, PLC shall not be responsible for humanclinical studies.

 

(c)                                  Notwithstandingthe foregoing division of responsibilities contained in Section 4.1(a) and(b) above, a Surgical Product shall be deemed ready for human use only if bothEdwards and PLC reasonably deem such Surgical Product to be ready for humanuse.

 

Section 4.2                                      SteeringCommittee.  The work under thisAgreement shall be performed by the Parties pursuant to the oversight of aSteering Committee to be constituted as below. The Steering Committee or “SC” may delegate its responsibilities to suchother committees as it may establish. Notwithstanding this Section 4.2, the Steering Committee shall notdelegate the “Major Decisions” set forth in Section 4.3.  The Steering Committee shall initiallyconsist of four (4) members with two (2) members designated by each Party.  The initial members are listed onSchedule 4.2.  A chairperson of theSteering Committee shall annually be nominated alternately by Edwards and PLC.  The Parties will be free to change theirrespective representatives on notice to the other Party.  The number of representatives may besubsequently amended from time to time by the mutual written agreement ofEdwards and PLC; provided, however, Edwards and PLC shall have at all times anequal number of representatives on the Steering Committee.  The Steering Committee shall exist until thetermination of this Agreement.  Thefirst meeting of the Steering Committee shall occur within sixty (60) days ofthe Effective Date.

 

Section 4.3                                      Responsibilitiesof the Steering Committee.  TheSteering Committee shall be responsible for the following decisions (“MajorDecisions”):

 

(a)                                  Approvalof all budgets, timelines, development priorities and long-range plansdeveloped pursuant to this Agreement, including without limitation, any of theDevelopment Plans, defined below;

 

(b)                                 Determinationof whether an Additional Product shall be added to the list of SurgicalProducts set forth in Schedule 1.2;

 

(c)                                  Determinationof whether a Surgical Product under development should proceed tomanufacturing; and

 

(d)                                 Reviewand monitor the compliance of the Surgical Products with all relevant rules andregulations promulgated by Applicable Regulatory Authorities.

 

The SC shall also have oversight of the Project Managers and their workunder this Agreement, which responsibility it shall not delegate.

 

Section 4.4                                      ProjectManager.  PLC and Edwards shall eachappoint a project manager (“Project Manager”) who shall be responsible forday-to-day management of the respective roles associated with the developmentand commercialization of Surgical Products

 

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hereunder.  The activities ofeach Project Manager shall be overseen by the Steering Committee.  Subject to Section 4.6 andSection 4.7, if a dispute arises between the respective Project Managersfor the parties on a matter, the matter shall be referred for further review tothe SC.  If the SC cannot resolve thedisputed matter, the dispute shall be resolved in accordance with the DisputeResolution provisions of Section 4.7. The Project Managers shall beresponsible for:  (a) preparation ofbudgets and timelines for each Party’s respective responsibilities, for thedevelopment, research, and manufacture of Surgical Products (collectively, “DevelopmentPlans”), which shall be submitted to the SC for approval; and (b) day-to-dayoversight of the implementation of the Development Plans and activities insupport of the commercial launch and ongoing sales of Products.

 

Section 4.5                                      Meetings.  The SC will meet according to an AnnualMeeting Schedule to be determined by the SC annually but, notwithstandingthe foregoing, the SC shall meet at least two (2) times per calendar year andthe Project Managers will meet at least four (4) times per calendar year, andeither or both entities may meet at additional times as the Parties shallagree.  The Annual MeetingSchedule for the SC for the year 2004 is attached herewith asSchedule 4.5.  Either Party maycall a special meeting of the SC on fifteen (15) days notice to the otherParty.  Additionally, the SC shall meetwithin ten (10) business days of the Project Managers’ request to approve anyMajor Decision.  In addition to the SCmembers, three representatives of each Party may attend each SC meeting as ex-officioobservers.  The chairperson shall sendto all SC members notices of all regular meetings and agendas for suchmeetings.  The Party convening a specialmeeting shall send notices and agendas for such meetings.  The meetings will alternate between theoffices of the parties, or may be held via teleconference, videoconference orsuch other place or manner as the Parties may mutually agree to.  Members of the SC shall be empowered to makedecisions within the scope of their responsibilities and shall have the rightto participate in and vote at meetings in person, by telephone, byvideoconference or by proxy.  The Partyhosting any meeting shall appoint a secretary to the meeting, who will recordthe minutes of the meeting which will be circulated to the members of the SCpromptly following the meeting for review, comment and adoption.

 

Section 4.6                                      DecisionMaking Criteria.  All decisions ofthe SC shall be made by majority vote and in the exercise of good faith.  Such decisions shall adhere to the ethicaland legal standards for the medical-device industry and shall be based on theprinciple that each party shall be required to utilize commercially reasonableefforts to research, develop, manufacture and commercialize SurgicalProducts.  Notwithstanding thisSection 4.6 regarding an SC majority vote, (i) Edwards shall have thetie-breaking vote in the SC with respect to determining whether an AdditionalSurgical Product shall be added to the list of Additional Surgical Products setforth in Schedule 1.2, and (ii) PLC shall have the tie-breaking vote inthe SC with respect to the setting of budgets (including all amendmentsthereto) for the research and development expenses associated with the InitialSurgical Products.

 

Section 4.7                                      DisputeResolution.  Subject toSection 4.6, if the SC is deadlocked or cannot resolve a disputed matterwithin thirty (30) days, the SC shall refer the matter to the

 

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Chairman or CEO of PLC and a Corporate Vice President of Edwards who isnot a member of the SC (“Executives”). If the Executives cannot resolve the issue within thirty (30) days, theExecutives shall mutually agree upon and appoint to the SC a “Temporary OutsideMember.”  “Temporary Outside Member”means a person who is knowledgeable in the medical-device industry, possessingsenior executive experience and skills and not associated with either Party ora competitor of either Party.  If theExecutives cannot agree on the identity of such Temporary Outside Member withinfifteen (15) days of the end of such thirty (30) day period, the Parties shallrequest a three-member arbitration panel composed as described below, sittingin Orange County, California to appoint to the SC a Temporary OutsideMember.  The arbitration panel shall becomposed of three (3) impartial arbitrators with each party selecting one (1)arbitrator within fifteen (15) days of the Executives inability to agree on theidentity of the Temporary Outside Member and the two (2) selected arbitratorsselecting a third arbitrator who is experienced in the US medical deviceindustry within thirty (30) days of their selection.  The SC shall meet and resolve the dispute within one week of theappointment of the Temporary Outside Member by the arbitration panel.  All decisions with respect to the issue indispute shall be made by a majority vote of the SC.  The Temporary Outside Member shall be instructed to render his orher votes consistent with the decision-making criteria of the SC set forth inSection 4.6.

 

Section 4.8                                      Selectionof Trademarks.  Edwards shall havethe sole right to choose the trademarks related to the Surgical Products.  Edwards shall provide PLC with copies of thetrademarks related to the Surgical Products for review and comment.  Edwards shall be solely responsible for allcosts, fees and other expenses associated with the prosecution, maintenance andenforcement of the trademarks related to the Surgical Products and any suchapplications shall be filed solely in the name of Edwards and owned solely byEdwards.

 

Section 4.9                                      PLCInvestment in Additional Surgical Products.  After completion of the development of (i) Phase 1 of the InitialSurgical Products set forth in Schedule 1.1 attached hereto, and (ii) ifapproved by the SC, Phase 2 of the Initial Surgical Products set forth in Schedule 1.1attached hereto, PLC shall make available ten percent (10%) of PLC’s revenuesfrom the Distribution Agreement (based on trailing 12 months sales) forinvestment in the development of Additional Surgical Products pursuant to thisAgreement.  Schedule 4.9 sets fortha description of how this Section 4.9 shall be implemented by the Parties.

 

**ARTICLE V****MANUFACTURE OF SURGICAL PRODUCTS**

 

Section 5.1                                      Appointment.  Subject to the terms and conditions of thisAgreement, (i) Edwards agrees that PLC shall be the exclusive manufacturer ofSurgical Products listed in Schedules 1.1 and 1.2, and (ii) PLC hereby agreesto manufacture or have manufactured and supply to Edwards such quantities ofSurgical Products as Edwards may from time to time order in accordance with theterms of the Distribution Agreement. PLC shall remain qualified with Edwards as an approved vendor during theterm of this Agreement.

 

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Section 5.2                                      LegalRequirements.  PLC shall manufactureeach Surgical Product pursuant to its specifications and in accordance with allLegal Requirements.  PLC acknowledgesthat it is familiar with and shall abide by QSR/ISO.  PLC and Edwards undertake to comply with all applicable LegalRequirements and all regulations of any Public Authority having jurisdictionover the manufacturing, storage, import, export, handling or sale of SurgicalProducts and materials or related to obtaining and maintaining legal approvalfor the manufacture, storage, import, export, handling, marketing and sale ofSurgical Products.

 

Section 5.3                                      Facilities.  Surgical Products shall be manufactured byPLC at its facility at Franklin, MA, or such other facility as may bereasonably determined by PLC and communicated to Edwards in writing.  PLC represents and warrants that SurgicalProducts shall only be manufactured at a facility which has been qualified byall applicable Public Authorities for the manufacture of such SurgicalProducts.  Upon request by Edwards, PLCshall provide to Edwards copies of the relevant licenses and permits withrespect to all such facilities.

 

Section 5.4                                      Inspection.  Upon the reasonable request of Edwards, PLCshall permit duly authorized employees of Edwards and, with the consent of PLC(not to be unreasonably withheld), other representatives of Edwards, to inspectthe facilities or its contract facilities, procedures and capabilities toinsure continued compliance with this Agreement and applicable LegalRequirements; provided that PLC may, in its sole discretion, refuse to grantaccess to any areas of its facilities or manufacturing records to the extentthat such access would jeopardize the confidentiality of any of PLC’s or anythird party’s proprietary technology not related to this Agreement.

 

Section 5.5                                      AdverseExperience Reporting.  During andafter the Term of this Agreement, each Party shall notify the other Parties ina reasonably timely fashion, or sooner if required by law, of any informationon any Complaint (howsoever obtained and from whatever source) associated withthe clinical uses, studies, investigations, testing and marketing of SurgicalProducts.  Each Party shall provide theOther Party with reasonable assistance in investigating Complaints.  Each Party shall further notify the other Partiesimmediately of any information received regarding any threatened or pendingaction by any Public Authority, which may affect the safety and effectivenessclaims of any Product.  Nothingcontained herein shall be construed as restricting any Party’s right to make atimely report of such matter to any Public Authority or take other action thatit deems to be appropriate or required by applicable Legal Requirements.

 

Section 5.6                                      Records.  All technical records relating to themanufacturing of any Surgical Product by or on behalf of PLC shall be retained(i) in accordance with PLC’s internal policies, a copy of which has beenprovided to Edwards, or, if greater, (ii) for the period required by any applicable Legal Requirements.

 

Section 5.7                                      Recall.  The Parties hereto shall observe at alltimes all Legal Requirements in order to maintain an effective system for therecall from the market of Surgical

 

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Products.  Notwithstandinganything herein to the contrary, if either PLC or Edwards deems it necessary toeffect a recall of any Surgical Product, it shall give the other Partyreasonable notice under the circumstances of such intended recall and anappropriate time to discuss and agree on such intended recall.  All costs of the recall shall be borne bythe party at fault, e.g., PLC shall pay for a recall due to the SurgicalProducts not being manufactured under the QSR or if the Surgical Products donot meet specifications upon release from PLC, and Edwards shall pay for arecall due to the Surgical Products not being stored or installed under the QSRor if Edwards provides PLC with false or misleading labeling.  Where a violation of the law occurs that isnot the fault of either PLC or Edwards, e.g., the Surgical Products aremishandled in a shipment by a common carrier, then PLC and Edwards shall sharethe cost of the recall equally.  In theevent that agreement cannot be reached on effecting the recall within five (5)business days, the Party who desires, in its reasonable judgment, to effect therecall may do so.  The other Party orParties shall take no action contrary to the recall and shall cooperate fullywith the Party effecting the recall.

 

**ARTICLE VI****REPRESENTATIONS, WARRANTIES AND COVENANTS**

 

Section 6.1                                      Representationsand Warranties of Edwards.  Edwardsrepresents and warrants to PLC and PLC Parent as follows:

 

(a)                                  Edwardsis a limited liability company duly organized, validly existing and in goodstanding under the laws of the State of Delaware.  Edwards has all necessary power and authority to execute, deliverand perform its obligations under the Transaction Documents and to consummatethe Transactions.

 

(b)                                 Theexecution, delivery and performance by Edwards of the Transaction Documents andthe consummation by it of the Transactions have been duly authorized, and noother action on the part of Edwards or its Affiliates is necessary to authorizethe execution and delivery by Edwards of the Transaction Documents or theconsummation by it of the Transactions. The Transaction Documents have been duly executed and delivered byEdwards and, assuming due and valid authorization, execution and deliverythereof by PLC and PLC Parent, the Transaction Documents are valid and bindingobligations of Edwards enforceable against Edwards in accordance with theirrespective terms, except (i) as limited by applicable Bankruptcy, insolvency,reorganization, moratorium, fraudulent conveyance and other similar laws ofgeneral application affecting enforcement of creditors’ rights generally and(ii) the availability of the remedy of specific performance or injunctive orother forms of equitable relief may be subject to equitable defenses and wouldbe subject to the discretion of the court before which any proceeding thereformay be brought.

 

(c)                                  Theexecution, delivery and performance of the Transaction Documents by Edwardswill not (with the passage of time, notice or both) violate the provisions of,or constitute a breach or default under (i) the organizational documents ofEdwards, (ii) any

 

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Law to which Edwards is subject, or (iii) any material contract towhich Edwards or any Affiliate is a party, in any case, that would result inthe imposition of any lien, claim, charge or other Encumbrance against any ofthe Contributed Assets or violate any Law or Order of any Governmental Entityor any arbitrator, having jurisdiction over Edwards, or otherwise affect theability of the Parties to exercise their rights or fulfill their obligationsunder the Transaction Documents.

 

(d)                                 Edwardshas good title to each of the Contributed Assets, free and clear of anyEncumbrances, except as described in Schedule 2.1.  Edwards has all right, power and authorityto sell, convey, assign, transfer and deliver the Contributed Assets to PLC inaccordance with the terms of this Agreement. Edwards has delivered the Contributed Assets to PLC, free and clear ofany and all Encumbrances except as described in Schedule 2.1.

 

(e)                                  (i)                                     To the best of itsknowledge, as of the Effective Date, Edwards and its Affiliates have taken allreasonable measures to protect the proprietary nature of each item of EdwardsIntel**l**ectualProperty, and to maintain in confidence all trade secrets and confidentialinformation.  As of the Effective Date,neither Edwards nor any of its Affiliates have previously granted any rights toany third party that are inconsistent with the rights granted to PLC under thisAgreement and neither it nor they have entered into any agreement pursuant towhich it or they have licensed, assigned, or otherwise disposed of any interestit or they have under the Edwards Intellectual Property in the Field of Use.

 

(ii)                                  Tothe best of its knowledge, on the Effective Date none of the Edwards IntellectualProperty constitutes a misappropriation of any Intellectual Property Rights ofany person or entity.

 

(f)                                    UNLESSOTHERWISE PROVIDED IN THIS AGREEMENT, THE PARTIES AGREE THAT THE CONTRIBUTEDASSETS ARE BEING CONTRIBUTED TO PLC AND ACCEPTED BY PLC IN THEIR PRESENT,STRICT “AS IS, WHERE IS” CONDITION AND WITH ALL FAULTS, AND THAT PLC AND PLCPARENT ARE NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KINDWHATSOEVER, EXPRESS OR IMPLIED, FROM EDWARDS, OR ANY OF ITS OFFICERS,DIRECTORS, EMPLOYEES, CONSULTANTS OR AGENTS RELEVANT TO THE CONTRIBUTED ASSETS.

 

Section 6.2                                      Representationsand Warranties of PLC and PLC Parent. PLC and PLC Parent jointly and severally represent to Edwards asfollows:

 

(a)                                  PLCis a corporation duly organized, validly existing and in good standing underthe laws of the State of Delaware.  PLCParent is a corporation duly organized, validly existing and in good standingunder the laws of the Yukon Territory. Each of PLC and

 

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PLC Parent has the necessary power and authority to execute, deliverand perform the Transaction Documents to which they are a Party and toconsummate the Transactions.

 

(b)                                 Theexecution, delivery and performance of the Transaction Documents by PLC and PLCParent and the consummation by them of the Transactions have been dulyauthorized by PLC and PLC Parent, and no other corporate action on the part ofPLC or PLC Parent is necessary to authorize the execution and delivery by PLCand PLC Parent of the Transaction Agreement or the consummation of theTransactions.  The Transaction Documentshave been duly executed and delivered by PLC and PLC Parent, as applicable,and, assuming due and valid authorization, execution and delivery thereby byEdwards, the Transaction Documents are valid and binding obligations of PLC andPLC Parent, enforceable against PLC and PLC Parent in accordance with theirrespective terms, except (i) as limited by applicable Bankruptcy, insolvency,reorganization, moratorium, fraudulent conveyance and other similar laws ofgeneral application affecting enforcement of creditors’ rights generally and(ii) the availability of the remedy of specific performance or injunctive orother forms of equitable relief may be subject to equitable defenses and wouldbe subject to the discretion of the court before which any proceeding thereformay be brought.

 

(c)                                  Theexecution, delivery and performance of the Transaction Documents by PLC and PLCParent, as applicable, will not (with the passage of time, notice or both)violate the provisions of, or constitute a breach or default under (i) thecharter or bylaws of PLC or PLC Parent, (ii) any Law to which PLC or PLC Parentis subject, or (iii) any material contract to which PLC or PLC Parent is a party,in any case, that would result in the imposition of any lien, claim, charge orother Encumbrance against any of the Contributed Assets or violate any Law orOrder of any Governmental Entity or any arbitrator, having jurisdiction overPLC and PLC Parent, or otherwise affect the ability of the Parties to exercisetheir rights or fulfill their obligations under the Transaction Documents.

 

Section 6.3                                      Edwards’Covenants.  Edwards covenants asfollows:

 

(a)                                  Edwardswill comply in all material respects with all local, state, federal andinternational  laws and regulations andshall use commercially reasonable efforts to obtain and at all times maintainany and all permits and certificates necessary to perform its obligations forthe research, development, testing and commercial exploitation of the SurgicalProducts to be performed by it under this Agreement in accordance with theterms and conditions of this Agreement.

 

(b)                                 Edwardswill take every reasonable action to protect the confidentiality of all EdwardsIntellectual Property, PLC Intellectual Property and Invention(s).

 

(c)                                  Edwardswill ensure that all of its employees, consultants, or agents involved increation of the Edwards Intellectual Property on behalf of Edwards shall assignto Edwards all of their right, title and interest in and to such EdwardsIntellectual Property

 

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and jointly developed Intellectual Property.  Edwards will ensure that all of its employees, consultants, oragents involved in creation of Invention(s) on behalf of Edwards shall assignto Edwards and PLC all of their right, title and interest in and to suchInvention(s).

 

(d)                                 Edwardswill comply with and not terminate the CardioFocus License or any other licenseagreement pursuant to which Edwards has any rights contained in EdwardsIntellectual Property, and Edwards will not modify any such licenses in any waythat would have a material adverse effect on PLC’s rights or obligations underthe Transaction Documents.

 

Section 6.4                                      PLCand PLC Parent’s Covenants.  PLC andPLC Parent covenant as follows:

 

(a)                                  PLCwill comply in all material respects with all local, state, federal andinternational laws and regulations and shall use commercially reasonableefforts to obtain and at all times maintain any and all permits andcertificates necessary to perform its obligations for the research,development, testing, manufacturing and commercial exploitation of the SurgicalProducts to be performed by it under this Agreement in accordance with the termsand conditions of this Agreement.

 

(b)                                 PLCand PLC Parent will take every reasonable action to protect the confidentialityof all PLC Intellectual Property, Edwards Intellectual Property andInventions(s).

 

(c)                                  PLCand PLC Parent will ensure that all of their employees, consultants, or agentsinvolved in creation of PLC Intellectual Property shall assign to PLC all oftheir right, title and interest in and to such PLC Intellectual Property.  PLC and PLC Parent will ensure that all oftheir employees, consultants, or agents involved in creation of Invention(s)shall assign to PLC and Edwards all of their right, title and interest in andto such Invention(s).

 

Section 6.5                                      WarrantyDisclaimer.  EXCEPT AS SET FORTH INTHIS AGREEMENT NO PARTY MAKES ADDITIONAL WARRANTIES, EXPRESS, IMPLIED, ORSTATUTORY, WHETHER WRITTEN OR ORAL, AS TO ANY OTHER MATTER WHATSOEVERINCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR APARTICULAR PURPOSE.

 

**ARTICLE VII****INDEMNITY**

 

Section 7.1                                      Indemnificationby PLC and PLC Parent.  PLC and PLCParent shall defend, indemnify and hold harmless Edwards Indemnitees from andagainst any and all Losses which any Edwards Indemnitee may suffer or incur byreason of:

 

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(a)                                  Anybreach by PLC and PLC Parent of any of its representations, warranties,agreements, or covenants contained in this Agreement or by the willfulmisconduct of PLC or PLC Parent, including, without limitation, by way of anymisappropriation, willful misstatement, or fraud on any Governmental Entity;

 

(b)                                 Anythird party Claim that any PLC Intellectual Property constitutes amisappropriation of any Intellectual Property of such third party; or

 

(c)                                  Anythird party Claim of harm or injury arising out of, related to, or inconnection with a product recall for which PLC is required to pay the expensespursuant to Section 5.7 or the manufacture of the Surgical Products thatis attributable to any PLC Intellectual Property.

 

Section 7.2                                      Indemnificationby Edwards.  Edwards shall defend,indemnify and hold harmless the PLC Indemnitees from and against any and allLosses which any PLC Indemnitee may suffer or incur by reason of:

 

(a)                                  Anybreach by Edwards of its representations, warranties, agreements, or covenantscontained in this Agreement or by the willful misconduct of Edwards, including,without limitation, by way of any misappropriation, willful misstatement, orfraud on any Governmental Entity;

 

(b)                                 Anythird party Claim that any Edwards Intellectual Property constitutes amisappropriation of any Intellectual Property of such third party; or

 

(c)                                  Anythird party Claim of harm or injury arising out of, related to, or inconnection with a product recall for which Edwards is required to pay theexpenses pursuant to Section 5.7 or the manufacture of the SurgicalProducts that is attributable to any Edwards Intellectual Property.

 

Section 7.3                                      IndemnificationProcedures.  The Party seekingindemnification (the “Indemnified Party”) pursuant to this ARTICLE VIIshall promptly notify the indemnifying party (the “Indemnifying Party”), inwriting, of such claim describing such claim in reasonable detail, providedthat the failure to provide such notice shall not affect the obligations of theIndemnifying Party unless and only to the extent it is actually prejudicedthereby.  In the event that such claiminvolves a claim by a third party against an Indemnified Party, theIndemnifying Party shall have 30 days after receipt of such notice to decidewhether it will undertake, conduct and control, through counsel of its ownchoosing (but reasonably acceptable to the Indemnified Party) and at its ownexpense, the settlement or defense thereof unless (i) the Indemnifying Party isalso a party to the proceeding and the Indemnified Party determines in goodfaith that joint representation would be inappropriate or (ii) the IndemnifyingParty fails to provide reasonable assurance to the Indemnified Party of itsfinancial capacity to defend such proceeding, and provide indemnification withrespect thereto, and if it so decides, the Indemnified Party shall

 

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cooperate with it in connection therewith, provided that theIndemnified Party may participate in such settlement or defense through counselchosen by it, and provided further that the fees and expenses of such counselshall be borne by the Indemnified Party. The Indemnifying Party shall not, without the written consent of theIndemnified Party (which consent shall not be unreasonably withheld,conditioned or delayed), settle or compromise any action, unless suchsettlement or compromise includes an unconditional release of the IndemnifiedParty and such settlement or compromise requires only the payment of monetarydamages.  If the Indemnifying Party doesnot notify the Indemnified Party within 30 days after the receipt of notice ofa claim of indemnity hereunder that it elects to undertake the defense thereof,the Indemnified Party shall have the right to contest, settle or compromise theclaim but shall not pay or settle any such claim without the consent of theIndemnifying Party (which consent shall not be unreasonably withheld,conditioned or delayed).  TheIndemnifying Party and the Indemnified Party shall cooperate fully in allaspects of any investigation, defense, pre-trial activities, trial, compromise,settlement or discharge of any claim in respect of which indemnity is soughtpursuant to this ARTICLE VII, including, but not limited to, providing theother Party with reasonable access to employees and officers (including aswitnesses) and other information.  Theremedies provided in this ARTICLE VII will not be exclusive of or limitany other remedies that may be available to the Indemnified Parties.

 

Section 7.4                                      Limitationof Liability.  NOTWITHSTANDINGANYTHING TO THE CONTRARY IN THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TOTHE OTHER PARTY OR THE OTHER PARTY’S AFFILIATES FOR ANY INCIDENTAL, PUNITIVE,SPECIAL, MULTIPLE, INDIRECT OR CONSEQUENTIAL DAMAGES, HOWEVER CHARACTERIZED,INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS OR BUSINESS OPPORTUNITIES,ARISING OUT OF, RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT OR ITS EARLYTERMINATION.  IRRESPECTIVE OF WHETHERSUCH LIABILITY IS ASSERTED IN TORT OR CONTRACT AND IRRESPECTIVE OF WHETHER THEPARTIES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, ALL REMEDIES OFTHE PARTIES SHALL BE LIMITED TO ACTUAL DIRECT DAMAGES.

 

**ARTICLE VIIIOTHER AGREEMENTS**

 

Section 8.1                                      ConfidentialInformation Generally.  Theexistence and terms and conditions of the Transaction Documents areconfidential, and neither Party may make any disclosures regarding theTransaction Documents without the express prior written consent of the otherParty, except:

 

(a)                                  asmay be required by law or legal process;

 

(b)                                 duringthe course of litigation so long as the disclosure of such terms and conditionsare restricted in the same manner as is the confidential information of other

 

23

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litigating parties and so long as: (i) the Disclosing Party seeks to protect the information in acourt-entered protective order; and (ii) the Disclosing Party informs theReceiving Party in writing in advance of the disclosure; or

 

(c)                                  inconfidence to its legal counsel, accountants, banks and financing sources andtheir advisors solely in connection with complying with financial transactions.

 

Section 8.2                                      Restrictionson Confidential Information.

 

(a)                                  TheReceiving Party agrees not to disclose any Confidential Information of theDisclosing Party and to maintain such Confidential Information in strictestconfidence, to take all reasonable precautions to prevent its unauthorizeddissemination and to refrain from sharing any or all of the information withany third party for any reason whatsoever except as required by court order,both during and after the Term of this Agreement.

 

(b)                                 TheReceiving Party agrees not to use the Confidential Information of theDisclosing Party for its own benefit or for the benefit of any third partyother than in accordance with the terms and conditions of this Agreement.

 

(c)                                  AllConfidential Information of PLC and PLC Parent remains the sole property of PLCand PLC Parent and all Confidential Information of Edwards remains the soleproperty of Edwards.

 

(d)                                 Uponwritten request of the Disclosing Party, or upon the expiration or othertermination of this Agreement for any reason whatsoever, the Receiving Partyagrees to return to the Disclosing Party all such provided ConfidentialInformation, including, without limitation, all copies thereof.

 

Section 8.3                                      Publicity.  No Party or any of its Affiliates shallissue or cause the publication of any press release or other announcement withrespect to the existence of, the terms, or implementation of the TransactionDocuments without the prior written approval of the other Parties, except asmay be required by law, and thereafter each Party shall reasonably consult withthe other Parties on the language of such release or announcement prior to itspublication.

 

**ARTICLE IXTERM; TERMINATION**

 

Section 9.1                                      Termof this Agreement.  This Agreementshall commence on the date hereof, and, unless extended by the mutual writtenagreement of the Parties (and then only upon the terms and conditions set forththerein) or sooner terminated in accordance with Section 9.2 hereof, shallcontinue for the enforceable life of the last to expire patent within EdwardsIntellectual Property (“Initial Term”). This Agreement shall be renewable for additional three (3) year terms byEdwards, at its option, as long as Edwards’ trailing twelve month sales of

 

24

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Surgical Products under this Agreement for the period immediately priorto expiration of the Term of the Agreement, defined below, is at least threemillion dollars ($3,000,000).  The “Termof this Agreement” shall mean the Initial Term and such additional three-yearterms, if any, for which Edwards renews the Agreement.

 

Section 9.2                                      Terminationof this Agreement.  Upon the occurrenceof any of the following, this Agreement, including any licenses granted herein(except as otherwise specified herein), may be terminated by:

 

(a)                                  Edwardsimmediately upon written notice to PLC or PLC Parent, or PLC or PLC Parentimmediately upon written notice to Edwards, if PLC or PLC Parent, or Edwards,as applicable, breaches any material provision of this Agreement and suchbreach is:  (i) incapable of cure; or(ii) capable of cure, but not cured within ninety (90) days of the breachingParty’s receipt of written notice of such default from the non-breaching Party.

 

(b)                                 Edwardsimmediately upon the Bankruptcy of PLC or PLC Parent or PLC immediately uponthe Bankruptcy of Edwards.

 

(c)                                  EitherPLC or Edwards upon thirty (30) days written notice to Edwards or PLC, asapplicable, if the research, development, or commercialization of the SurgicalProducts or any component thereof is blocked or otherwise rendered commerciallyunfeasible by adverse legal or regulatory action, or by the Intellectual Propertyrights of any third party.

 

(d)                                 Beginningtwo (2) years after the Effective Date, either Edwards or PLC, at any time uponone hundred eighty (180) days prior written notice to the other Party.  During such 180-day period, PLC shall nolonger be obligated to advance the development of any Products.

 

(e)                                  Edwardsat any time upon at least sixty (60) days prior written notice to PLC, providedthat on the date of termination Edwards shall deliver to PLC a termination feein the sum of $2,000,000 by wire transfer of immediately available funds.  During such notice period, PLC shall nolonger be obligated to advance the development of any Products.

 

(f)                                    Mutualwritten agreement of the Parties.

 

Section 9.3                                      Effectof Termination.  Upon expiration orearly termination of this Agreement, the following shall immediately occur:

 

(a)                                  Withinthirty (30) days of such expiration or early termination, PLC and PLC Parentshall return all Confidential Information of Edwards, and vice versa, in itspossession or under its control.

 

25

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(b)                                 Withinthirty (30) days of such expiration or early termination, PLC and/or PLC Parentshall provide Edwards, and vice versa, with a copy of all relevant InitialSurgical Product or Additional Surgical Product documentation in its possessionor under its control.

 

(c)                                  TheDistribution Agreement shall terminate provided, however, that, for six monthsfollowing such expiration or early termination, Edwards shall be allowed tosell any Surgical Products in its inventory and all applicable terms of theDistribution Agreement will continue with respect to such sales.

 

Section 9.4                                      Survival.  Expiration or early termination of thisAgreement shall not relieve any Party of its obligations incurred prior to theexpiration or early termination.  Thefollowing provisions, subject to any restrictions or limitations containedtherein shall survive expiration or early termination of this Agreement:  Section 2.4, ARTICLE III,ARTICLE VII and ARTICLE X hereof, Sections 5.5, 5.6, 5.7, 8.1, 8.2,9.3 hereof and this Section 9.4.

 

**ARTICLE X****MISCELLANEOUS**

 

Section 10.1                                Relationship.  The relationship of Edwards and PLCestablished by this Agreement and the Transaction Documents is of independentcontractors and not agents, and nothing in this Agreement or any TransactionDocument shall be construed:

 

(a)                                  Togive either Edwards or PLC the power to direct or control the daily activitiesof the other beyond the obligations imposed on Edwards and PLC, respectively,by this Agreement;

 

(b)                                 Toconstitute Edwards and PLC as partners, joint ventures, co-owners or otherwiseas participants in joint undertaking; or

 

(c)                                  Toallow either Edwards or PLC to create or assume any obligation on behalf of theother for any purpose whatsoever.

 

Section 10.2                                NoConflict.  Each Party represents andwarrants to the other Parties that it is not subject to any contractualobligation or restraint which will materially interfere with its right andability to perform pursuant to the terms of this Agreement.

 

Section 10.3                                GoverningLaw.  This Agreement shall begoverned by, interpreted under, and construed in accordance with the internallaws of the State of New York, including, without limitation, Sections 5-1401,5-1402 of the New York General Obligations Law and New York Civil Practice Lawsand Rules 327(b).

 

Section 10.4                                Escalation.  Edwards and PLC (and/or PLC Parent) willattempt in good faith to resolve expeditiously any dispute, claim orcontroversy arising out of or relating to

 

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this Agreement (the “Dispute”) promptly by negotiations betweenexecutives who have authority to settle the controversy and who are at a higherlevel of management than the persons with direct responsibility for the administrationof this Agreement.  Either Party maygive the other Party, written notice (the “Escalation Notice”) of any Disputenot resolved in the normal course of business. Within 15 days after delivery of the Escalation Notice, the Party inreceipt of the Escalation Notice shall submit to the other a writtenresponse.  The Escalation Notice and theresponse thereto shall include (a) a statement of each Party’s position and asummary of arguments supporting that position, and (b) the name and title of theexecutive who will represent that Party and of any other person who willaccompany the executive.  Within 30 daysafter delivery of the Escalation Notice, the executives of both Parties shallmeet at a mutually acceptable time and place, and thereafter as often as theyreasonably deem necessary, to attempt to resolve the Dispute.  All reasonable requests for information madeby one Party to the other will be honored. All negotiations pursuant to this clause are confidential and shall betreated as compromise and settlement negotiations for purposes of applicablerules of evidence.  The Parties shallattempt to resolve any Dispute pursuant to the procedure set forth in thisSection 10.4 for a period up to 60 days from the date of delivery of theEscalation Notice before resorting to other available remedies; *provided,however*, nothing contained in this Section 10.4 shall preventany Party from resorting to judicial process if injunctive or other equitablerelief from a court is necessary to prevent serious and irreparable injury toit or to others.  The use of theprocedure set forth in this Section 10.4 will not be construed under thedoctrine of laches, waiver or estoppel to affect adversely any Party’s right toassert any claim or defense.

 

Section 10.5                                Jurisdictionand Consent to Service.  Inaccordance with the laws of the State of New York, and without limiting thejurisdiction or venue of any other court, the Parties (a) agree that any suit,action or proceeding arising out of or relating to this Agreement shall bebrought solely in the state or federal courts of New York; (b) consent to theexclusive jurisdiction of each such court in any suit, action or proceedingrelating to or arising out of this Agreement; (c) waive any objection which anyof them may have to the laying of venue in any such suit, action or proceedingin any such court; and (d) agree that service of any court paper in any suchsuit, action or proceeding may be made in any manner as may be provided underthe applicable laws or court rules governing service of process in suchcourt.  The foregoing shall not apply toactions for injunctive relief, as to which such jurisdiction shall benon-exclusive.

 

Section 10.6                                Notices.  All notices, demands, requests, consents,approvals or other communications required or permitted to be given hereunderor which are given with respect to this Agreement shall be in writing and shallbe delivered (charges prepaid, receipt confirmed or return receipt requested(if available)) by hand, by nationally recognized air courier service, bycertified mail or facsimile, addressed as set forth below or to such otheraddress as such Party shall have specified most recently by writtennotice.  Notice shall be deemed given andeffective (i) if delivered by hand or by nationally recognized courier service,when delivered at the address specified in this Section 10.6

 

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(or in accordance with the latest unrevoked written direction from suchParty), (ii) if by certified mail, four (4) business days after mailing or(iii) if given by facsimile when such facsimile is transmitted to the faxnumber specified in this Section 10.6 (or in accordance with the latestunrevoked written direction from such Party), provided the appropriateconfirmation is received.

 

To PLC:

 

PLC Medical Systems Inc.10 Forge ParkFranklin, MA  02038Attention:  Chief Executive OfficerFax:  (508) 541-7990

 

with a copy (which shall not constitute notice) to:

 

Hale and Dorr LLP60 State StreetBoston, MA  02109Attention:  Steven D. Singer, Esq.Fax:  (617) 526-5000

 

To Edwards:

 

Edwards Lifesciences LLCOne Edwards WayIrvine, California  92614Attention:  General CounselFax:  (949) 250-6850

 

with a copy (which shall not constitute notice) to:

 

Skadden, Arps, Slate, Meagher & Flom LLP300 South Grand Avenue, Suite 3400Los Angeles, California  90071-3144Attention:  Joseph J. Giunta, Esq.Fax:  (213) 687-5600

 

Section 10.7                                Interpretation.  When a reference is made in this Agreementto a Section, Schedule or Exhibit, such reference shall be to a Section,Schedule or Exhibit of this Agreement unless otherwise indicated.  When a reference is made in this Agreementto a specific Schedule, such reference shall be deemed to include, to theextent applicable, all the other Schedules. The table of contents, table of definitions, titles and headingscontained in this Agreement are for reference purposes only and shall notaffect in any way the meaning or interpretation of this Agreement.  When the words “includes” or “including” areused in this Agreement, they shall be deemed to be followed by the words“without limitation.”  All accountingterms not defined in this Agreement shall have the meanings determined bygenerally

 

28

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accepted accounting principles as of the date hereof.  All capitalized terms defined herein areequally applicable to both the singular and plural forms of such terms.

 

Section 10.8                                Severability.  In the event that any one or more of the provisionscontained herein, or the application thereof in any circumstances, is heldinvalid, illegal or unenforceable in any respect for any reason, the Partiesshall negotiate in good faith with a view to the substitution therefore of asuitable and equitable solution in order to carry out, so far as may be validand enforceable, the intent and purpose of such invalid provision; *provided,however*, that the validity, legality and enforceability of any suchprovision in every other respect and of the remaining provisions containedherein shall not be in any way impaired thereby, it being intended that all ofthe rights and privileges of the Parties hereto shall be enforceable to thefullest extent permitted by law.

 

Section 10.9                                Counterparts.  This Agreement may be executed in two ormore counterparts, each of which shall be deemed an original and all of whichshall, taken together, be considered one and the same agreement, it beingunderstood that the Parties need not sign the same counterpart.

 

Section 10.10                          EntireAgreement; No Third Party Beneficiaries. The Transaction Documents, including all exhibits and schedules heretoand thereto, by and among the Parties hereto,

 

(a)                                  constitutethe entire agreement of the Parties with respect to the subject matter hereofand supersede all prior and contemporaneous agreements, representations,understandings, negotiations and discussions between the Parties, whether oralor written, with respect to the subject matter hereof; and

 

(b)                                 shallbe binding upon and shall inure to the benefit of each of the Parties heretoand thereto and their respective successors and permitted assigns and is notintended to confer any rights, remedies or benefits on any Persons other thanas expressly set forth in this Section 10.10.

 

Section 10.11                          Amendmentsand Modifications; Waivers and Extensions.

 

(a)                                  Noamendment, modification or termination of this Agreement shall be binding uponany other Party unless executed in writing by the Parties hereto intending tobe bound thereby.

 

(b)                                 AnyParty to this Agreement may waive any right, breach or default which such Partyhas the right to waive; provided that such waiver will not be effective againstthe waiving Party unless it is in writing, is signed by such Party, andspecifically refers to this Agreement. Waivers may be made in advance or after the right waived has arisen orthe breach or default waived has occurred. Any waiver may be conditional. No waiver of any breach of any agreement or provision herein containedshall be deemed a waiver of any

 

29

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preceding or succeeding breach thereof nor of any other agreement orprovision herein contained.  No failureor delay in exercising any right, power or privilege hereunder shall be deemeda waiver or extension of the time for performance of any other obligations oracts nor shall any single or partial exercise thereof preclude any other orfurther exercise thereof or the exercise of any other right, power orprivilege.

 

Section 10.12                          Assignment. Neither this Agreement nor any of therights, duties or obligations hereunder may be assigned or delegated by any ofthe Parties hereto without the prior written consent of PLC or Edwards, as thecase may be, which may be withheld in its sole discretion except that Edwardsmay assign all its rights and obligations to any subsidiary of EdwardsLifesciences Corporation, provided, however, any Party may assign thisAgreement and all rights, duties or obligations hereunder in connection withthe sale of more than 51% of the outstanding capital stock of such Party in oneor more related transactions, a merger or the transfer of all or substantiallyall the assets to which this Agreement relates.  Any attempted assignment or delegation of rights, duties orobligations hereunder in contravention hereof shall be void and of no effect.

 

Section 10.13                          Exhibitsand Schedules.  Each of the exhibitsand schedules referred to herein and attached hereto is an integral part ofthis Agreement and is incorporated herein by reference.

 

Section 10.14                          Expenses.  Except as otherwise provided in thisAgreement, each Party to this Agreement shall bear its respective expensesincurred in connection with the preparation, execution, and performance of thisAgreement and the transactions contemplated hereby, including all fees andexpenses of agents, representations, counsel and accountants.

 

Section 10.15                          ForceMajeure.  Notwithstanding anythingto the contrary contained in this Agreement, no liability or loss of rightshereunder shall result to any Party from delay or failure in performance (otherthan payment) caused by governmental restrictions (excluding any regulatoryactions taken by the FDA or similar bodies), war, acts of terrorism,commotions, riots, strikes, lockouts and acts of God such as fire, flood orother similar causes that are beyond the control of the parties (each a “ForceMajeure Event”).  Except to the extentcaused by the foregoing, Force Majeure Events shall not include shortage oflabor, lack of or inability to obtain materials, fuel or supplies (unlesscaused solely by priorities, restrictions or allocations imposed bygovernmental authority), or any other industrial disturbance.

 

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement asof the date first above written.

 
|   | PLC SYSTEMS INC.          |
|--------|---------------------------|
|   |                      |   |
|   |                      |   |
|   | By:                       |   | /s/ James G. Thomasch |   |
|   | Name:                     | James G. Thomasch |   |
|   | Title:                    | Senior Vice President & |   |
|   |                      |   | Chief Financial Officer |   |
|   |                      |   |   |   |
|   |                      |   |   |   |
|   | PLC MEDICAL SYSTEMS, INC. |   |
|   |                      |   |   |   |
|   |                      |   |   |   |
|   | By:                       |   | /s/ James G. Thomasch |   |
|   | Name:                     | James G. Thomasch |   |
|   | Title:                    | Senior Vice President & |   |
|   |                      |   | Chief Financial Officer |   |
|   |                      |   |   |   |
|   |                      |   |   |   |
|   | EDWARDS LIFESCIENCES LLC  |   |
|   |                      |   |   |   |
|   |                      |   |   |   |
|   | By:                       |   | /s/ John H. Kehl, Jr. |   |
|   | Name:                     | John H. Kehl, Jr. |   |
|   | Title:                    | Corporate Vice President, |   |
|   |                      |   | Strategy and Business Development |   |

 

31

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SCHEDULE 1.1

 

**InitialSurgical Products**

 

Summary Description of Initial Surgical Products

 

The following are Phase 1 Surgical Products, as more fully described inthe specifications attached as Exhibit I to this Schedule 1.1 as may bemodified from time to time by the Steering Committee:

 

•                  [**].

 

•                  [**].

 

•                  [**].

 

•                  [**].

 

•                  [**].

 

Phase 2 Surgical Products: Edwards and PLC shall jointly specify and establish feasibility for thedevelopment, design and manufacture of the following Surgical Productsprovided, however, that the decision to develop, design and manufacture suchSurgical Products shall be made by the Steering Committee:

 

•                  [**].

 

•                  [**].

 

----

 

EXHIBIT I

 

**PreliminaryProduct SpecificationOptimazeTM Surgical Laser ConsoleEdwards Part Nos. 692457001A (Model 1); 692457002A (Model 3)**

 

**Device Name:**

 
| Official- |   | Laser Console |
|-----------|--------|---------------|
| Common-   |   | Medical Laser |

 

**Intended Use:**

 

The OptimazeTM Surgical Laser Console is intended for the delivery of980 nm laser light to soft tissue in contact or non-contact mode duringsurgical procedures including via endoscopes, introducers or catheters.Indications include the incision, excision, dissection, vaporization, ablationor coagulation of soft tissue.

 

**General Description:**

 

**Overview:**

 

The Laser Console includes the laser instrument and optical andelectronic components.  The instrumentincludes a diode laser module as the therapeutic energy source, as well as aninternal thermal safety system for monitoring and disabling laser poweroutput.  Handpiece irrigation iscontrolled via a side-mounted pinch valve that is footswitch actuated.

 

The surgical laser, Model 60-980 OptimazeTM Surgical Laser Console, isto be used with the OptimazeTM Surgical Ablation Handpiece.

 
| Surgical laser:       | Model 60-980 OptimazeTM Surgical Laser Console Edwards Model No. 60980 |
|-----------------------|----------------------------------------------------------------------------|
|                  |                                                                       |
| Part Number:          | P/N 18-0628                                                                |
|                  |                                                                       |
| Edwards Part Nos.:    | 692457001A (Model 1) and 692457002A (Model 3)                              |
| Maximum power output: | 66W                                                                        |
|                  |                                                                       |
| Output Wavelength:    | 980nm +/-15nm                                                              |
|                  |                                                                       |
| Input Voltage:        | 100VAC ± 15% to 240VAC ± 15% and 50 or 60 Hz ± 1 Hz         |
| Size:                 | 23”D x 16”W x11.5”H                                         |
| Weight:               | < 60 lb                                                                 |

 

----

 

**PackagingConfiguration**:

 

Each Laser Console will ship in two (2) containers. One (1) console boxcontaining the laser console and labeling indicating the user manual can befound in the accessory box, and one (1) accessory box containing a foot pedal,keys, user manual, interlock bypass plug, and one country specific power cord.

**ConsoleBox containing the laser console only:**

 

----

 

(1)                                  Model60-980 Optimaze Surgical Laser Console
| P/N:                                                | 18-0628              |
|-----------------------------------------------------|----------------------|
|                                                |                 |
| Edwards Model 60980 Optimaze Surgical Laser Console |
| P/Ns:                                               | 692457001A (Model 1) |
|                                                | 692457002A (Model 3) |

 

**AccessoryBox containing:**

 

(1)          Laser Installation kit                                                                                                            P/N18-0632Foot pedal

 
| Laser Keys (2)                                |        |
|-----------------------------------------------|-------------|
| User manual                                   |        |
| Interlock bypass plug                         |        |
|                                          |        |
| Power cord - US -120v 60 Hz                   | P/N 18-0633 |
| Power cord - 120v 50 Hz - Japan plug          | P/N 18-0634 |
| Power cord – 2/20v 50 Hz (Europe plug 1) | P/N 18-0635 |
| Power cord - 220v 50 Hz (Europe plug 2)       | P/N 18-0636 |
| Power cord - 220v 50 Hz (Europe plug 3)       | P/N 18-0637 |
| Power cord - 220v 50 Hz (Europe plug 4)       | P/N 18-0638 |

 

**UserSupplied Items (Accessories):**

 
| **Item**                             |   | **Manufacturer** |   | **Size** |   | **Part  Numbers** |
|--------------------------------------|--------|------------------|--------|----------|--------|-------------------|
|                                 |   |             |   |     |   |              |
| Optimaze Surgical Ablation Handpiece |   | Edwards          |   | NA       |   | 18-0498           |
|                                 |   |             |   |     |   |              |
|                                 |   | Edwards          |   | NA       |   | 692577001A        |

 

**OptionalAccessories**

 
| **Item**             |   | **Manufacturer** |   | **Size** |   | **Part  Numbers** |
|----------------------|--------|------------------|--------|----------|--------|-------------------|
|                 |   |             |   |     |   |              |
| Laser safety glasses |   | Uvex             |   | N/A      |   | DVO LOTG-YAG/CO2  |

 

----

 

**Compatibility:**OptimazeTM Surgical Ablation HandpieceAdministration Tubing Sets:  Irrigationconnection has a standard female luer fitting for connection to commerciallyavailable tubing sets.

 

**RegulatoryClassifications**

 

FDA Laser Class 1MFDA Medical Device Class IIEN60601-1 Class I, Type CFEN55011 (CISPR 11) Class B, Group 1

 

**Glossary**

 

**•**Delivery device:OptimazeTM Surgical Ablation Handpieces.

• LaserConsole: The electronic instrument used to generate, control and monitor laseroutput

• Wavelength:Color of laser emission spectrum.

• Laserproduct: OptimazeTM Surgical Laser Console with automatic thermal safety systemthat constitutes, incorporates, or is intended to incorporate a laser or lasersystem.

• LowOH: Low water content glass for transmission of IR light.

• NumericalAperture (NA): Numerical Aperture is defined as the sine of the half angle oflight emitted from the output port of the system.

• U/I:User interface.

• Thermalsafety system: Automatic system to detect excessive heat in the optical pathand shut system down when a predetermined threshold is exceeded.

• Opticalpath: the path of travel of laser energy.

 

**System Components**

 
| System Controller:           | the system controller block represents the hardware and software that  monitors and controls the functioning of the laser instrument.                                                                                                                                  |
|------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Thermal Safety System (TSS): | the thermal safety system is a safety circuit, intended to monitor  the black body radiation associated with excessive heating in the disposable  device and associated optics and to disable the laser in the event that  excessive black body radiation is detected. |
| Optics Module:               | the optics module is an optical subsystem which provides means for  sending laser energy to the delivery device and also provides means for  directing black body radiation from the disposable device to the safety  system IR detector.                              |
| User Interface:              | the user interface provides means for information display to the user  as well as a mechanism for user input. The user interface for the laser  instrument will likely include an LCD display                                                                          |

 

----

 
|          | and a keypad.                                                                                                                               |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------|
| Footswitch:   | the laser instrument will interface to a footswitch for on/off  control of the laser emission.                                              |
| Diode Driver: | the diode driver block represents the electronics required to control  power supplied to the laser module                                   |
| Diode Module: | the diode module is a purchased component, comprised of a series of  laser diodes, which produces the output laser energy.                  |
| Power Supply: | an AC/DC power supply provides DC power necessary to run the system  electronic components. The supply is internal to the laser instrument. |

 

----

 

**DetailedRequirements Specifications:**

 

----

 

SCHEDULE 2.1

 

**ContributedAssets**

 

** Indicates assets that must stay at Edwards and vendors to supportTransition Period Endo & Encircle product builds

 
| **Asset** |   | **Current  Location** |   | **Asset #** |   | **Status** |   | **Physical  Transfer** |
|-----------|--------|-----------------------|--------|-------------|--------|------------|--------|------------------------|
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   | [**]       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   | [**]       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   | [**]       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   | [**]       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   | [**]       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   | [**]       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
|      |   |                  |   |        |   |       |   |                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   |        |   |       |   | [**]                   |
|      |   |                  |   |        |   |       |   |                   |
| [**]      |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   | [**]        |   | [**]       |   | [**]                   |
| [**]      |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]      |   | [**]                  |   | [**]        |   |       |   | [**]                   |

 

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| [**]   |   | [**]   |   | [**]   |   |   |   | [**]   |
|--------|--------|--------|--------|--------|--------|--------|--------|--------|
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| **Laser Assets List** |   |                  |   |        |   |       |   |                   |
|-----------------------|--------|-----------------------|--------|-------------|--------|------------|--------|------------------------|
|                  |   |                  |   |        |   |       |   |                   |
| **Asset**             |   | **Current  Location** |   | **Asset #** |   | **Status** |   | **Physical  Transfer** |
| [**]                  |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]                  |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]                  |   | [**]                  |   |        |   |       |   | [**]                   |
| [**]                  |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]                  |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]                  |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]                  |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]                  |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]                  |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]                  |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]                  |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]                  |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]                  |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]                  |   | [**]                  |   | [**]        |   |       |   |                   |
| [**]                  |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]                  |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]                  |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]                  |   | [**]                  |   | [**]        |   |       |   |                   |
| [**]                  |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]                  |   | [**]                  |   | [**]        |   |       |   | [**]                   |
| [**]                  |   | [**]                  |   | [**]        |   |       |   | [**]                   |

 

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SCHEDULE 2.6

 

**TransitionPeriod**

 

•                  “TransitionPeriod” shall mean from the Effective Date through [**].

 

•                  “TransitionProducts” shall mean Disposable Products manufactured by Edwards during theTransition Period.

 

•                  During theTransition Period, Edwards shall have the right to develop, make, use and sellTransition Products.  Thereafter,Edwards shall have the right to sell Transition Products for any additionalperiod needed for Edwards to sell down any inventory of finished TransitionProducts permitted to be made by Edwards pursuant to this Schedule 2.6(the “Additional Period”).

 

•                  Edwards shallmake the Transition Products at Edwards’ cost and Edwards shall retain allrevenues associated with the sale of Transition Products.  Edwards shall not be obligated to sell anyDisposable Products made by PLC and shall not be obligated to share anyDisposable Product Margin with PLC until the expiration of the AdditionalPeriod.

 

•                  During theTransition Period, Edwards shall have the right to use any raw materialsEdwards owns for making Transition Products. After the end of the Transition Period, Edwards shall make any remainingraw materials inventory for Surgical Products available to PLC for purchase formaking Surgical Products, all in accordance with Section  7.2(f) ofthe  Distribution Agreement.  Edwards shall also have the right to retainpossession of and make use of, the assets identified on Schedule 2.1 ofthe CD & M Agreement for purposes of making Transition Products.  As soon as practicable following the end ofthe Transition Period, Edwards, at its cost, shall transfer such assets to PLCin their condition at such time.

 

•                  Edwards, at itselection, may purchase from [**] the first [**] Laser Power Sources and anysubsequent number of Laser Power Sources approved by the SC.  Thereafter, in accordance with the terms ofthe Distribution Agreement, PLC shall provide Edwards with Laser Power Sourcesto meet customer demand during the Transition Period and continuing thereafterfor the Term of the Distribution Agreement. To the extent Edwards purchases any such lasers from [**] it shall lookto [**] for the product warranty for such lasers.

 

•                  Consistent withits roles and responsibilities under the CD&M Agreement, PLC shall remainresponsible for managing the research, development and manufacture of the LaserPower Sources during the Transition Period, including managing the relationshipwith [**].  During the TransitionPeriod, Edwards shall be permitted to assist with and/or perform development ofTransition Products.

 

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•                  After theexpiration of the Additional Period, all customer demand for DisposableProducts shall be met by PLC, provided that:

 

(i)             [**] prior to the end of the TransitionPeriod, PLC has reasonably demonstrated to the SC that the Disposable Productsproduced by PLC meet the specifications for such products; and

 

(ii)          [**] prior to the end of the TransitionPeriod, PLC has reasonably demonstrated to the SC that PLC has the ability toproduce the Disposable Products in sufficient quantities to meet customerdemand; and

 

(iii)       PLC has provided Edwards with an initialstocking order of Disposable Products (the “Initial Stocking Order”), pursuantto a purchase order from Edwards, no later than [**] prior to the end of theTransition Period.  If PLC is late inproviding Edwards with the Initial Stocking Order, the Transition Period shallextend one day for each day PLC is late in delivering the Initial StockingOrder to PLC.

 

If PLC is late with respect to items (i) or (ii) above, then theTransition Period shall automatically extend an additional [**].

 

•                  During the TransitionPeriod, Edwards shall make for sale no more than [**] Transition Products,provided that if customer demand during the Transition Period is greater than[**] Transition Products, the SC shall evaluate and reasonably determinewhether PLC is ready and able to produce Disposable Products for sale byEdwards.  If the SC determines that PLCis not ready and able to produce sufficient quantities of Disposable Productsto meet customer demand, then Edwards shall be permitted to make reasonablequantities of Transition Products in excess of [**] nits to satisfy customerdemand until such time as the SC reasonably determines that PLC is ready andable to make Disposable Products in quantities sufficient to satisfy customerdemand.  No new Disposable Products maybe manufactured by or on behalf of Edwards during the Additional Period.  Notwithstanding the foregoing, during theAdditional Period, Edwards may complete any Transition Products made during theTransition Period.

 

The foregoing is subject to modification by the SC, in accordance withthe terms and conditions of the CD & M Agreement.

 

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SCHEDULE 4.2

 

**InitialMembers of Steering Committee**

 

Edwards Members:

1.               KeithReisinger

2.               PawanTomkorea.

 

PLC Members:

1.               MikeAdams

2.               KenLuppi

 

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SCHEDULE 4.5

 

**SteeringCommittee Meeting Schedule for 2004**

 

First Meeting:  First CalendarQuarter of 2004

 

Second Meeting:  Second CalendarQuarter of 2004

 

Third Meeting:  Third CalendarQuarter of 2004

 

Fourth Meeting:  Fourth CalendarQuarter of 2004

 

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SCHEDULE 4.9

 

**Investment inAdditional Surgical Products**

 

In order for the Parties to determine how the investment in AdditionalSurgical Products shall be determined, the following description shall be usedas a guide by the Parties:

 

1.                                       Edwardsor PLC proposes an Additional Surgical Product to the SC for development.

 

2.                                       TheSC approves the Additional Surgical Product for development and it is added toSchedule 1.2.  Edwards has the tiebreaking vote for this SC decision pursuant to Section 4.6.

 

3.                                       TheSC approval shall include a budget and a timeline for the development of suchAdditional Surgical Product.

 

4.                                       Foreach quarter in the timeline PLC and Edwards shall determine PLC’s SurgicalProduct revenues from the Distribution Agreement for the trailing 12 months andshall make available [**]% of the revenue to the development of all AdditionalSurgical Products without carryover from quarter to quarter.

 

5.                                       Inthe event the budgets for all Additional Surgical Products for any quarter inthe timeline require more funds than PLC is obligated to provide pursuant toSection 4.9 and item 4 above, then Edwards shall be obligated to fund suchshortfall in full.

 

6.                                       Steps4 and 5 above shall be repeated for each quarter in the timeline.

 

An example of the foregoing is attached to this Schedule asExhibit II.

 

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EXHIBIT II

 

***R&D Funding ofAdditional Products***

 

Example (For illustrative purposes only)

 
| **Quarter**                                          |   | **1**  |   | **2**  |   | **3**  |   | **4**  |   | **5**  |   | **6**  |   |
|------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PLC Surgical Product Sales (000)                     |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   |
| Trailing Twelve Month (TTM) Sales                    |   |   |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Available R&D Fund ([**]% of TTM)                |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Funding requirements for Additional Product programs |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Example Program 1                                    |   | [**]   |   | [**]   |   |   |   |   |   |   |   |   |   |
| Example Program 2                                    |   |   |   |   |   |   |   | [**]   |   | [**]   |   | [**]   |   |
| Utilized Fund for Additional Product  programs       |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| R&D Fund excess / (shortfall)                    |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EW pays to PLC for shortfall                         |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   |
| R&D Fund expiration                              |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   | [**]   |   |

 

Absolute numbers are for illustrative purposes only.

 

All terms are defined in the agreement.

 

Concept Explanation:

 

At the beginning of each quarter, PLC will make available for thatquarter an amount equal to [**]% of PLC’s trailing twelve month sales fromSurgical Products for investment in research and development and relatedexpenses of Additional Product programs.

 

If PLC’s available investment for the given quarter is not utilized byan Additional Product program for that quarter, the funding commitment willexpire at the end of that quarter and shall be refreshed using the sameapproach for the next quarter.

 

If at the end of any given quarter PLC has spent more than theirrequired R&D investment for the Additional Product program, subject to theSC approved budget, EW shall compensate PLC for the differential.

 

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